Odyssey could lose treasure

A shipwrecked treasure of an estimated $500 million in Colonial Spanish silver and gold coins should go to Spain, according to a June 3 ruling by a Florida court.

The coins recovered by Odyssey Marine Exploration, a Tampa salvage firm, from a ship identified as the Nuestra Senora de Mercedes would be returned to the Spanish government of King Juan Carlos if a decision by a U.S. Magistrate Court judge in U.S. District Court in Tampa is not modified.

In the contentious case with a docket sheet containing hundreds of documents, U.S. Magistrate Judge Mark A. Pizzo was assigned by the court to review and analyze the claims and make a recommendation to the U.S. District Court Judge Steven D. Merryday.

Pizzo made a recommendation that Merryday will have to clarify and turn into an opinion and finally a judgment affecting title to tons of gold and silver coinage that has been salvaged, removed from the remote site and shipped to the United States. Odyssey is a successful salver which presently has 15 different salvage actions brought by “arresting” long-sunken vessels pending in the U.S. District Court for the Central District of Florida, headquartered in Tampa. The Mercedes sank on Oct. 5, 1804, after a battle with the British navy off the Straits of Gibraltar in international waters.

The sinking had dramatic consequences, killing over 250 sailors in the Battle of Cape St. Mary’s and causing Spain to declare war against England and enter the Napoleonic Wars on the side of France. Among the dead: the Mercedes ship’s captain (José Manuel Goycoa) and the family of Second Squadron Leader Diego de Alvear. The manifest aboard showed a cargo departing from Peru laden with nearly 600,000 silver and gold coins.

Odyssey Marine Exploration in 2006 listed the Mercedes with 30 other shipwrecks of interest that were suspected of meeting their demise along a heavily traveled area.

In November 2006, Odyssey representatives met with an official from Spain’s Ministry of Culture seeking Spain’s consent to recover and sell artifacts from shipwrecks of historical or cultural interest to Spain. Although the participants now have different views about the meeting, all agree Spain failed to give Odyssey explicit approval.

By March 2007, Odyssey discovered sunken objects in international waters about 100 miles west of the Straits of Gibraltar at a depth of approximately 3,300 feet. It recovered an artifact (a small bronze block), symbolically deposited that item with the Florida Court and on the basis of this asked for the “arrest of the vessel.”

Odyssey then went to court and demanded under the “law of finds” possessory rights and ownership over the items it has recovered and that remain at the salvage site. It alternatively asked the court, under the “law of salvage,” that it be given “a liberal salvage award” for its services.”

Challenges to the Florida court’s authority, challenges to Spain succeeding to the rights of Peru, and other more nuanced legal overtures were reviewed by the court and are part of the 34-page, 11,000-word decision, which at first blush appears to turn treasure salver law on its ear.

“Two sovereigns and 25 descendants of those [who died] aboard the Mercedes have filed claims against the” ship, Pizzo began. Spain’s position is straightforward, he says. The underwater wreck “is unquestionably the remnants of the Mercedes; Spain has not abandoned its sovereignty of the vessel, particularly one of such historical significance.” His summary of the Spanish view: “under applicable treaties and executive branch directives, Spain’s warship should be accorded the same respect as those of the United States; and this court is without subject matter jurisdiction over the res under” the Foreign Sovereignty Immunity Act.

Peru, he says, has a different agenda. “The Republic of Peru, which did not exist as a sovereign in 1804, asserts a “conditional claim” to “all of its property and patrimony,” namely that specie minted in or produced from ore extracted from Peruvian territory. In sum, Peru argues this court should “address the competing claims of Peru and Spain before reaching the question of whether either or both nations have sovereign immunity from the claims of Odyssey.”

One of the many pieces of evidence that persuaded Pizzo that this was the warship (or frigate) Mercedes was its numismatic cargo.

“The Mercedes was loaded with approximately 900,000 coins from El Callao and Montevideo. The mix overwhelmingly favored silver to gold; in fact, the Mercedes only carried a few hundred gold coins,” Pizzo wrote.

His summary of the salvaged contents of the vessel: “Coincidentally, Odyssey recovered: approximately 594,000 coins; with an overwhelming disparity of silver to gold; dating from the latter half of the 18th century to no later than 1804; all of Spanish nationality; and minted almost exclusively in the South American Spanish Crown Colonies” and the mint in Lima in particular.

If this is truly a Spanish warship carrying Peruvian gold and silver that was sunk by a British frigate off the coast of Portugal, you are perhaps a tad confused as to why a U.S. court in Tampa is administering the claims of the parties. Pizzo has an answer to that.

“Since our nation’s founding, federal courts sitting in admiralty, and particularly when adjudicating salvage claims, have applied the jus gentium, or the customary law of the sea, the origins of which date back to the ancients,” he wrote. Pizzo looked to precedent and saw the salvage of the Titanic.

“Titanic cautions a court should wade carefully into international waters to adjudicate a salvage claim, particularly one that concerns a historical wreck with significant loss of life. This admonition is even more appropriate when the salver’s claim implicates a foreign sovereign’s patrimonial interests and that sovereign’s asserted independence from suit” under the Foreign Sovereign Immunities Act.

Spain’s argument that American courts should abstain from handling the case was made under the 1976 Sovereign Immunities Act passed by Congress, but its ultimate predicate is an 1812 case decided by Chief Justice John Marshall and studied by those who practice international law – the Schooner Exchange case.

“In 1976 Congress enacted the FSIA, in order to free the government from the case-by-case diplomatic pressures, to clarify the governing standards, and to assure litigants that … decisions are made on purely legal grounds and under procedures that insure due process.”

Marshall applied the doctrine to a case involving another Napoleonic War vessel, and found that the courts of the United States lacked jurisdiction over an armed ship of a foreign state in a United States port.

Pizzo wrote, “Unquestionably, the Mercedes is the property of Spain – constructed in 1788 by Navy Engineers in the shipyard of the Spanish Navy in Havana, Cuba; commanded by officers and crewed by sailors of the Royal Spanish Navy throughout its service; and designated as a Spanish frigate of war.”

He continues, “It remains on the Royal Navy’s official registry of ships.” Then, he recites a series of treaties and international conventions that he believes govern the salvage of the treasure.

“The United States protects its sunken warships” his analysis begins, citing an article in the first Geneva Convention on the High Seas, Art. 8, done April 29, 1958, (“Warships on the high seas have complete immunity from the jurisdiction of any State other than the flag State”); and a domestic law, the Sunken Military Craft Act of 2004.

It is emphatic: “[n]o salvage rights or awards shall be granted with respect to … any foreign sunken military craft located in United States waters without the express permission of the relevant foreign state.”

Peru’s claims were swiftly dispatched, ultimately concluding that the viceroyalty of Peru might have claims – but that there was no jurisdiction to handle those claims, either, because of sovereign immunity.

Pizzo concluded by saying that “More than 200 years have passed since the Mercedes exploded. Her place of rest and all those who perished with her that fateful day remained undisturbed for the centuries – until recently. International law recognizes the solemnity of their memorial, and Spain’s sovereign interests in preserving it.

“This court’s adherence to those principles promotes reciprocal respect for our nation’s dead at sea…. It is this comity of interests and mutual respect among nations, whether expressed as the jus gentium (an impetus to exercise judicial authority) or as sovereign immunity (an impetus for refraining from the exercise of judicial authority), that warrants granting Spain’s motions to vacate the Mercedes’s arrest and to dismiss Odyssey’s amended complaint.”

Thus, he made four recommendations to the district Court:

1. Spain’s motion to dismiss and motion to vacate the arrest warrant be granted. 2. Odyssey’s amended complaint be dismissed and the warrant of arrest (of the ship) be vacated. 3. All claims against the wreck be denied without prejudice. 4. Odyssey, as the substitute custodian, be directed to return the [wreck] to Spain within 10 days or as mutually agreed.

A U.S district court judge will decide this together with the salvage compensation Odyssey may be entitled to if the recommendation is upheld – something Pizzo did not look at because it would be premature.

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